DETROIT – General Motors will offer voluntary buyouts to “the majority” of its 58,000 US white-collar employees, as it aims to cut $2 billion in structural costs over the next two years, according to a letter sent to workers on Friday from CEO Mary Barra.
The “Voluntary Separation Program,” or VSP, will be offered to all US salaried employees who have spent five years or more with the company as of June 30. time in the company.
GM expects to take pretax costs of up to $1.5 billion related to the buyouts, according to a public filing Monday. Most of the cost is expected to be cash and occur during the first half of the year, the company said.
Barra, in a letter Thursday, said the program is “designed to accelerate attrition in the U.S.,” helping companies avoid “unintended actions” in the future. The buyout offer comes after the Detroit automaker said last week it would end about 500 payroll positions worldwide.
The last time GM offered a massive buyout program was for about 18,000 North American salaried employees in 2018-2019.
“Employees are strongly encouraged to consider the program,” GM said in an emailed statement to CNBC Thursday. “By permanently reducing structured costs, we can increase vehicle profitability and remain nimble in an increasingly competitive market.”
GM announced a $2 billion cost-cutting program in January, saying between 30% and 50% of the savings are expected through 2023. At the time, executives said they were planning headcount reductions through attrition rather than layoffs.
GM CEO Mary Barra speaks to the media prior to the start of the 2017 General Motors Annual Meeting of Shareholders Tuesday, June 6, 2017 at GM Global Headquarters in Detroit, Michigan.
Photo by John F. Martin for GM
US employees who are approved for purchase will be given one month’s pay for each year of work for up to 12 months, as well as COBRA health coverage. They will also receive prorated team performance bonuses and outplacement services. Global employees will receive base salary, incentives, COBRA and outplacement services.
Eligible employees interested in the program must apply by March 24. Those who choose to take the voluntary package and are approved will leave on June 30.
A company spokesman declined to disclose the number of employees the company is targeting to receive the buyout package. At the end of last year, GM employed about 81,000 salaried employees worldwide, according to public filings.